Boscola: Phase-In of Higher, Deregulated Rates Will Help

HARRISBURG (FEB 4, 2009) – Hard economic times will make it harder to balance this year’s state budget.

But, a phase-in of higher, deregulated electric rates will help millions of Pennsylvanians stretch their family budgets a little bit further during the current recession, according to State Senator Lisa M. Boscola.

During his annual budget address to a joint session of the Senate and House of Representatives today, Governor Ed Rendell specifically called for a mandated phase-in of deregulated electric rates “to help families weather these tough times.”

Beginning next year, 85 percent of electric customers throughout Pennsylvania will be charged fully deregulated prices, which means some customers will see their monthly bills double in size, Boscola said.

“For the Governor to make rate mitigation part of his state budget address shows that it’s a top priority,” she said. “I commend him for standing up for working families that are hurting right now. Even in good economic times, people would be struggling to pay any bill that suddenly increased by 50 or 60 percent. And right now we are about as far from good economic times as we can get.”

Specifically, Governor Rendell said the following today during his budget address to the Joint Session of the legislature:

“One of the highest priorities in this regard must be to help working families confront the impact of expiring caps on electricity rates.

“At some point in the next 24 months, most Pennsylvania families will experience sticker shock when they open their electric bills.

“Even though some electricity rate increases may be lower than projected, these increases will arrive in the midst of the recession, and make no mistake: they will swamp families that are already having a very hard time keeping their heads above water.

“For this reason, we must work together to mandate a phase-in of the rate increases over three or four years, so that Pennsylvania ratepayers don't get hit with the full cost of these increases all at once.”

Boscola, who serves at the Minority Chair of the Senate Consumer Protection Committee, worked closely with the Governor last year to enact sweeping legislation dealing with least-cost procurement of power, energy conservation, and smart-meter technology.

That new law is expected to save Pennsylvania electric customers over $500 million a year once all of its provisions are implemented.

“When the Governor came to my district to sign that historic bill into law, he said that we’d be working together on rate mitigation next,” she said. “He’s a man of his word and I know for a fact that he is personally committed to making rate mitigation a top priority in the months ahead.”

Boscola said that phasing-in higher electric rates over three or four years makes sense at a time when unemployment rates are swelling and working families are struggling to make ends meet.

“You wouldn’t increase taxes on people by 50 percent during a bad economy like this,” she said. “So we shouldn’t allow power companies to raise electric rates by 50 percent, either. At a time when small businesses are really having a hard time surviving and are already having to lay-off workers, doubling their monthly electric bill is the surest and quickest way to put them out of business. We need to do everything we can to preserve jobs and put people back to work who lost their jobs because of this financial crisis – and that includes keeping the price of electricity affordable in Pennsylvania.”

In addition to gradually phasing-in the projected rate increases over three or four years, Boscola also expressed her support for giving ratepayers a cash rebate or “Deregulation Dividend.”

“Pennsylvania electric customers paid $12 billion to relieve utility companies of their stranded costs,” she said. “We put down a huge down-payment on the promise of a competitive market that would offer customers more choices and lower electric bills. In reality, we all paid for something that the power companies never delivered. I don’t think that’s right.”